Reference no: EM133118521
Diamond Landscaping Inc. is a successful business located outside of Toronto. The firm is considering an expansion project: a new 10,000 square foot greenhouse, which would sit on land the company already owns. The land was purchased by the firm for $200,000 five years ago. If the expansion project does not go ahead, the land could be sold today for $450,000.
The new greenhouse structure has an expected initial cost of $2 million and forecasted annual increased cash flows of $525,000 would result from the expansion for the next 8 years. This is in addition to the firm's regular cash flows of $950,000 per year.
The firm has 5,000 bonds outstanding that currently have a yield to maturity of 8%. Each bond has a face value of $1000 and the 6% coupon is paid semiannually. The bonds were issued 2 years ago and will mature 5 years from today. The firm also has 30,000 preferred shares outstanding with a par (book) value of $10 per share and an annual dividend of $4 per share. The yield on those preferred shares is now 9%. The last component of the firm's capital structure is 200,000 common shares. Each common share is expected to pay $1 dividend next year, which is expected to grow at an annual rate of 6% indefinitely. Common shareholders require a total return of 10% on their investment. The firm has a small business tax rate of 25%.
The firm has come to you for advice. Should they go ahead with the expansion project? (Explain your reasoning and/or show your calculations)
|
Npv for the company project
: Tall Trees, Inc. is using the net present value (NPV) when evaluating projects. You have to find the NPV for the company's project, assuming the company's cost
|
|
Compute the effective annual interest rate
: You are working as a financial adviser. Jackson, one of your clients, approached you for a consultation about his plan to save for his daughter's education in t
|
|
Prepare journal entries to record development of landfill
: Prepare journal entries to record the development of the landfill, and the asset retirement obligation for the landfill, on January 1, 2012
|
|
Explain different liquidity
: List and explain different liquidity and risk and state for each how this risk can be mamaged within financial insitutions .please have intext citations and ref
|
|
Firm regular cash flows
: Diamond Landscaping Inc. is a successful business located outside of Toronto. The firm is considering an expansion project: a new 10,000 square foot greenhouse,
|
|
Prepare the entry to admit sean to the partnership
: On Jan 1, 2021, Jon and John admit Sean as a 25% partner. Sean contributes $30000. Prepare the entry to admit Sean to the partnership
|
|
Record the year-end adjustment for uncollectible accounts
: Record the year-end adjustment for uncollectible accounts, assuming the current balance of the Allowance for Uncollectible Accounts is $830 (credit)
|
|
Maximize the value of the company to shareholders
: In 1976, American economist Fischer Black wrote a seminal paper entitled The Dividend Puzzle. The core of the paper was that dividends do not matter because the
|
|
How can knowing what you value in a career
: How can knowing what you value in a career help keep you motivated in your education?
|